A good economic theory or model weeds out unimportant facts from important ones. This process is called ______.
a. abstraction
b. reflection
c. correlation
d. specialization
a. abstraction
You might also like to view...
Why did the interest rate volatility of the 1970s spur financial innovation?
What will be an ideal response?
A theory stating that individuals make purchasing decisions based on tastes which change randomly at random intervals is not useful because
A) it is not possible to test the predictions of the model. B) tastes are not the only factor influencing behavior. C) the model is too simplistic. D) the predictions of such a model would be incorrect.
Why do people hold money (currency and checking account balances), and thereby forgo earning interest or dividends from a financial investment?
a. Some money is demanded for everyday transactions like parking fees, lunch, and buying groceries. b. Some money is demanded as a precaution against unexpected costs such as automobile repairs, speeding tickets, or temporary loss of a job. c. Some money is demanded for speculative purchases of stocks, bonds, or collectibles in case they become available at a particularly low price. d. All of the above are correct.
The potential growth rate is sometimes also called the ________ of the economy.
A. stop point B. peak C. speed limit D. breaking point